So, in this scene (realizing I'm much too familiar with Friends….) Monica asks "was it…?" and she's asking if Paolo had an erection. Phoebe's response is alluding to the slang term "pitch a tent" which describes the shape created by a guy's pants (or a sheet, in this case) when he has an erection. I guess saying that boy scouts could've camped under it means it was a big...tent.

Guessing at the context, boy scouts camp in teepees, and with his other two legs, a teepee could be made... If that's off base, it could just be that boy scouts make it funnier because they are a group of people that camp. Alternatives that could also fit that hypothesis would be hippies or hobos.